Work-related costs scheme: staff allowances

Do you provide staff allowances to your employees? The work-related costs scheme (werkkostenregeling, WKR) allows you to spend part of your total taxable wage (the 'discretionary scope' or 'discretionary margin') without tax liability on:

• reimbursements (for example a reimbursement for a haircut)
• benefits in kind (for example Christmas or birthday present)
• provisions (for example a company bicycle) 

What are the conditions for the WKR scheme? 

If you want to use the work-related costs scheme, you must keep to these conditions: 

• You do not pay wage tax on the amount within the so-called discretionary scope (vrije ruimte). The discretionary scope is reassessed every year.
• You pay a final levy (eindheffing) over any amount above the discretionary scope. You do not have to pay national insurance contributions, employee insurance contributions, and employer's health care insurance contributions over this final levy amount. You also do not have to withhold the healthcare insurance contribution. 

You can learn more on how to calculate the discretionary scope and final levy in chapter 10 Eindheffing werkkostenregeling berekenen of the Dutch-language Payroll Taxes Handbook (pdf). 

Specific exemptions and zero valuations 

Aside from the WKR you can reimburse certain expenses, provide benefits in kind, or make provisions for your employees without tax liability. You can do this through: 

• specific exemptions (gerichte vrijstellingen), such as reimbursements for costs incurred by working from home, travel allowances, or costs incurred to pay for a certificate of conduct (VOG).
• zero valuations (nihilwaarderingen), such as work clothing or refreshments at work 

You can find more information on specific exemptions and zero valuations in chapter 22 Gerichte vrijstellingen, nihilwaarderingen en normbedragen of the Dutch-language Payroll Taxes Handbook (pdf). 

How to use the WKR scheme 

Employers must justify the WKR when you file your payroll tax returns (aangifte loonheffingen). Do you need to pay a final levy? Then you must justify your WKR in the second tax period of the following calendar year. If you do not surpass the discretionary scope, you do not need to file and pay the final levy.